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  • Wed, Jan 28 2009
  • 1:37 PM » Layoffs by State
    Published Wed, Jan 28 2009 1:37 PM by The Big Picture
    click for interactive map > Source: JEFF BATER WSJ, JANUARY 27, 2009, 5:24 P.M. ET See also:
    Click Here to Read the Full Article

    Source: The Big Picture
  • 1:22 PM » House GOP Blocks DTV-Delay Bill
    Published Wed, Jan 28 2009 1:22 PM by WSJ
    House Republicans derailed an effort to delay until June the date when television stations must broadcast in all-digital format.
  • 1:22 PM » Report: FBI saw Mortgage Fraud, Lacked Resources
    Published Wed, Jan 28 2009 1:22 PM by Calculated Risk Blog
    From Paul Shukovsky at the Seattle Post-Intelligencer: (hat tip John) It is clear that we had good intelligence on the mortgage-fraud schemes, the corrupt attorneys, the corrupt appraisers, the insider schemes," said a recently retired, high FBI official. Another retired top FBI official confirmed that such intelligence went back to 2002. The problem, according to the two FBI retirees and several other current and former bureau colleagues, is that the bureau was stretched so thin that no one noticed when those lenders began packaging bad mortgages into bad securities. "We knew that the mortgage-brokerage industry was corrupt," the first of the retired FBI officials told the Seattle P-I. "Where we would have gotten a sense of what was really going on was the point where the mortgage was sold knowing that it was a piece of dung and it would be turned into a security. But the agents with the expertise had been diverted to counterterrorism." So apparently the FBI missed the point where the "piece of dung" became a marketable "security".
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 12:34 PM » WSJ on Jumbo Loans
    Published Wed, Jan 28 2009 12:34 PM by Calculated Risk Blog
    This article has a couple of scary charts on delinquent jumbo loans. The situation is especially grim in Florida with close to 17% of jumbo loans delinquent. From the WSJ: (hat tip ShortCourage) About 6.9% of prime "jumbo" loans were at least 90 days delinquent in December, according to LPS Applied Analytics, a mortgage-data research firm. The rate was up sharply from 2.6% a year earlier. In comparison, delinquencies of non-jumbo prime loans that qualify for backing by government agencies climbed to 2.1% from 0.8% in December 2007. ... Conforming-loan limits top out at $625,000 in the highest-cost housing markets. To buy a more expensive home, buyers must put up larger down payments -- between 30% and 40% -- and pay higher mortgage rates. Rates on 30-year fixed jumbo mortgages stood at 6.87% last week, compared to 5.34% for conforming mortgages, a difference of 1.53 percentage points, according to HSH Associates, a financial publisher. I'm sure I'll receive a number of emails from mortgage brokers telling me they have a better deal (please no!), but it's no wonder sales of expensive homes have slowed significantly.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 11:06 AM » Financial shares jump on bank aid, Wells Fargo
    Published Wed, Jan 28 2009 11:06 AM by Reuters
    NEW YORK (Reuters) - Shares of major U.S. banks soared after the market open on Wednesday, boosted by optimism that President Barack Obama's administration was moving quickly to stabilize the banking sector and as lawmakers get ready to vote on a stimulus package to boost the recession-hit economy.
  • 10:05 AM » To Cosign or Not to Cosign
    Published Wed, Jan 28 2009 10:05 AM by Washington Post
    Two years ago, cosigned mortgage loans were rarities. These days, though, cash-strapped and credit-challenged home buyers are turning to cosigners, usually relatives willing to vouch for the mortgage payment in order to seal the deal with a lender.
    Click Here to Read the Full Article

    Source: Washington Post
  • 10:04 AM » Wells Fargo swings to $2.6 billion loss on credit write-downs
    Published Wed, Jan 28 2009 10:04 AM by Market Watch
    Wells Fargo & Co. on Wednesday reports a quarterly loss of about $2.6 billion as the banking giant is hit by credit write-downs and losses at Wachovia, which it recently acquired.
  • 10:03 AM » The Fed: Life after zero
    Published Wed, Jan 28 2009 10:03 AM by CNN
    The Federal Reserve wraps up its two-day meeting about what to do with interest rates Wednesday afternoon. But that's probably two more days than the central bank needed.
  • 10:03 AM » Credit Weakness Spreads from Subprime to Alt A to Jumbo
    Published Wed, Jan 28 2009 10:03 AM by The Big Picture
    Today’s WSJ: “Rising defaults by affluent homeowners are raising the specter of another cloud over banks and investors, which could get stuck with thousands of expensive homes. About 6.9% of prime “jumbo” loans were at least 90 days delinquent in December, according to LPS Applied Analytics, a mortgage-data research firm. The rate was up sharply from 2.6% a year earlier. In comparison, delinquencies of non-jumbo prime loans that qualify for backing by government agencies climbed to 2.1% from 0.8% in December 2007. Jumbo mortgages average about $750,000 and can run as high as $5 million or more. More borrowers with such loans are being hit by layoffs that are spreading through practically every sector and pay level of the U.S. economy.” This is reflective of two things: The abdication of lending standards during the 2002-07 period, and the ongoing economic contraction. Check out all the jumbo loans going bad in Florida! Much worse than the rest of the nation — what sort of lending standards were going on amongst all of those builder-financed condos along the inter-coastal? Geez, what junk! > > Source : NICK TIMIRAOS WSJ, JANUARY 28, 2009
    Click Here to Read the Full Article

    Source: The Big Picture
  • 10:03 AM » Bankers' Worst Nightmare Materialize
    Published Wed, Jan 28 2009 10:03 AM by
    Amidst soaring chargeoffs and ever increasing job layoff announcement, . Bankers' worst nightmare is the unemployment rate climbing toward 10%, a level at which credit losses could balloon unpredictably because of high defaults among people with previously strong credit histories. Right now, bank balance sheets don't appear in a position to deal with unemployment moving sharply higher from its current 7.2% rate. Building up bad-loan reserves to deal with a 9% to 10% rate could produce enormous losses and pulverize capital when banks are trying to preserve the thin cushions they have. And fear of rising unemployment could deter lending when the government wants banks to expand credit. True, the Obama administration's stimulus plan could reduce unemployment expectations. But right now, banks are hoisting their joblessness forecasts. Last week, consumer lender Capital One Financial increased its unemployment forecast to 8.7% by the end of 2009, from its previous expectation of 7% by midyear. And Capital One added that it is building more-severe unemployment scenarios into lending decisions. Also last week, Kelly King, chief executive of regional bank BB&T, said unemployment of 8% to 8.5% is "kind of manageable," but 9% to 10% would "have a dramatic impact on our scenarios." Why the trepidation of going above 9%? Take a regular credit-card book. Past data show that a percentage-point increase in unemployment leads to roughly a percentage-point rise in the charge-off rate, the amount of defaulted loans written off at a loss. But as unemployment exceeds 9%, bankers think charge-offs will start to increase by more than the increase in unemployment. The reason? A high rate could cause an unprecedented wave of defaults among prime borrowers, who tend to have bigger loan balances. "The situation is so extreme and beyond what we've seen in past cycles that management teams are becoming reluctant to predict the relationship between unemployment...
    Click Here to Read the Full Article

  • 7:57 AM » Mortgage applications dropped 38.8% last week: MBA
    Published Wed, Jan 28 2009 7:57 AM by Market Watch
    Mortgage applications fall a seasonally adjusted 38.8% in the week ended Jan. 23 compared with the prior week, Mortgage Bankers Association data show, as interest rates charged on fixed-rate mortgages decline slightly.
  • 7:57 AM » Snag a great deal on a short sale
    Published Wed, Jan 28 2009 7:57 AM by CNN
    When Brian Gavitt, a physician, and his wife Gayleen, a stay-at-home mom, started to eye homes in Sacramento last winter, they knew they were looking in the hardest-hit areas of the housing bust. So the couple, who were relocating from Lansing, figured they could land a fantastic bargain in no time at all.
  • 7:57 AM » Take bad assets out of banks: Obama adviser
    Published Wed, Jan 28 2009 7:57 AM by Reuters
    DAVOS, Switzerland (Reuters) - Repairing financial markets and revitalizing lending will require governments to remove bad assets from banks and recapitalize them, Laura Tyson, an economic adviser to the Obama administration, said on Wednesday.
  • 12:10 AM » Mortgage Demand Hurting Wells Fargo?
    Published Wed, Jan 28 2009 12:10 AM by
    Here’s an interesting tidbit. Apparently Wells Fargo hasn’t been able to lower interest rates as much as they’d like because the company can’t keep up with the demand and related costs of originating all the new loans. Wells Fargo Home Mortgage co-president Cara Heiden told Bloomberg in a telephone interview that lenders are increasingly uncertain about how [...]
    Click Here to Read the Full Article

  • 12:10 AM » SL Green: Manhattan Office Vacancy Rate to Hit 12%
    Published Wed, Jan 28 2009 12:10 AM by Calculated Risk Blog
    From Bloomberg: Manhattan office vacancies may rise to 12 percent within 24 months, SL Green Realty Corp. Chief Executive Officer Marc Holliday said today on a conference call. SL Green, New York’s biggest office landlord with 23.2 million square feet ... From the SL Green conference call (hat tip Brian): “Clearly this is a market where we are relooking at the ways we lease and do business with tenants. We are more cautious today. We have increased our security deposit requirements for tenants that are less than obviously credit worthy and this is something that we have done in other bad markets. It's paid off for us. It's kept our credit losses to a minimum in good and bad market. We are also doing more net effective deals where we put out less capital and pay less commission on slightly lower rents but rents that still provide for uptick relative to prior escalated rents. The market however is certainly feeling the pressure of job losses, Financial Services contraction, sublet space and a limited but growing number of business failures. We can't help but expect that vacancy rate in midtown is going to rise beyond where we had originally forecasted those vacancy rates to be at around ten to 12%. At the moment those rates seem to be at around eight to 9% vacant currently, maybe even 10% if you take into account whatever space we think will be coming available directly or indirectly online in 2009. And we think that that vacancy rate could easily now hit 12% or more over the next 24 months. emphasis added Mayor Bloomberg on the NY City economy in early November. Here is a graph of their projected vacancy rate and rents (close to the SL Green projections): Click on graph for larger image in new window. This graph shows the actual and projected (by the NYC OMB) rents and office vacancy rate for NYC Class A buildings. The vacancy rate is expected to rise from about 7.5% to 13%, and rents are expect to decline by 20% or more from the peak.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • Tue, Jan 27 2009
  • 11:10 PM » Bofa CEO Lewis likely to face unhappy board
    Published Tue, Jan 27 2009 11:10 PM by Washington Post
    CHARLOTTE, N.C. -- A crucial quarterly board meeting Wednesday could increase pressure on Bank of America Corp. Chief Executive Ken Lewis to make sure his acquisition of Merrill Lynch & Co. works.
    Click Here to Read the Full Article

    Source: Washington Post
  • 11:09 PM » Meltdown 101: What it means to nationalize a bank
    Published Tue, Jan 27 2009 11:09 PM by Washington Post
    NEW YORK -- Buying stakes in troubled banks. Taking control of toxic assets.
    Click Here to Read the Full Article

    Source: Washington Post
  • 11:08 PM » Fed acts to stem foreclosures by relaxing mortgage terms
    Published Tue, Jan 27 2009 11:08 PM by Market Watch
    After years of pressure from lawmakers on Capitol Hill, the Federal Reserve acts to stem foreclosures sweeping the nation.
  • 11:08 PM » Recovering commercial paper market still needs Fed, investors say
    Published Tue, Jan 27 2009 11:08 PM by Market Watch
    The commercial paper market, due for a three-month check-up after a late-2008 resuscitation by the Federal Reserve, faces a tough recovery and possibly more aid from the Fed before private buyers return on their own, analysts and investors say.
  • 11:08 PM » Moody's says could cut GE's triple-A credit rating
    Published Tue, Jan 27 2009 11:08 PM by Reuters
    BOSTON (Reuters) - Moody's Investors Service said on Tuesday it was reviewing General Electric Co's triple-A credit ratings, which could lead to a downgrade, and its shares fell as much as 5 percent in extended trade.
  • 10:52 PM » Pandit warns against nationalising banks
    Published Tue, Jan 27 2009 10:52 PM by
    Citigroup's chief executive says the move would force the US government to take over the entire sector, leading to a radical overhaul of the global financial system
  • 10:52 PM » Obama Officials Weigh Risky Options to Aid Economy
    Published Tue, Jan 27 2009 10:52 PM by Washington Post
    President Obama's top advisors are in the final stages of debating several perilous options to right the financial system, all of which are likely to prove unpopular and in some cases carry a significant risk of failure, according to sources in contact with the officials.
    Click Here to Read the Full Article

    Source: Washington Post
  • 10:52 PM » Court mortgage-modification bill passes House committee
    Published Tue, Jan 27 2009 10:52 PM by Market Watch
    A key House of Representatives committee approves legislation that would give bankruptcy judges the authority to eliminate some mortgage debt in order to help reduce foreclosures.
  • 4:35 PM » Lending Drops at Big U.S. Banks
    Published Tue, Jan 27 2009 4:35 PM by
    Lending fell 1.4% in the fourth quarter at 10 of the 13 biggest beneficiaries of the Treasury's TARP. Banks argue prudent lending takes time and demand is ebbing.Wait...wasn't this one of the primary reasons for the "bailout"?
    Click Here to Read the Full Article

  • 4:16 PM » AP IMPACT: US bets execs can save banks, this time
    Published Tue, Jan 27 2009 4:16 PM by
    It's one of the ironies of the U.S. financial bailout: The banking executives now managing billions in taxpayer money are the same ones who oversaw the industry's near collapse.
    Click Here to Read the Full Article

  • 3:32 PM » Roubini: Bloomberg Interview from Zurich
    Published Tue, Jan 27 2009 3:32 PM by Calculated Risk Blog
    All this fiscal stimulus is necessary, cause the alternative is a depression. Roubini, Jan 27, 2009 Note: Listening to the Roubini interview (see video below), I think he is forecasting less than 6 million in net job losses in the U.S. this year because of the stimulus plan. Here is a quick transcript: "At this rate we will could lose another 6 million jobs in 2009 on top of the 2.5 [million] lost the last year. The Obama plan wants to create 2 to 3 million jobs. By the means, even if you implement it, the job losses are going to be smaller. We are not going to create on net, we are going to have job losses falling to 200 to 250 [thousand] losses per month as opposed to 500 thousand. That is the best we can expect for this year. And I think the unemployment rate will keep on increasing even next year because it is a lagging indicator. The unemployment rate is going to peak above 9% sometime in 2010. It is pretty bleak." From Bloomberg: Global stock market declines are increasingly correlated and emerging economies will follow developed nations into a “severe recession,” according to New York University Professor Nouriel Roubini. Roubini said economic growth in China will slow to less than 5 percent and the U.S. will lose 6 million jobs. The American economy will expand 1 percent at most in 2010 as private spending falls and unemployment climbs to at least 9 percent, he added. ... Roubini said the U.S. government should nationalize the biggest banks because losses will exceed assets, threatening to push them into bankruptcy. The banks could be privatized again in two or three years, Roubini said. The professor reiterated his prediction that U.S. financial losses will more than triple to $3.6 trillion and that global equities will fall 20 percent this year from current levels.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 3:32 PM » Michigan Sheriff Sends Foreclosure Letter To Gov.
    Published Tue, Jan 27 2009 3:32 PM by
    Evans wrote he would like to see a moratorium on home mortgage foreclosures for six months. He's also asking the governor to set up a Blue Ribbon Commission to find ways to provide affordable mortgages. Evans is a candidate for the mayor of Detroit. The election is Feb. 24.
    Click Here to Read the Full Article

  • 2:29 PM » State Farm to exit Fla. homeowner insurance
    Published Tue, Jan 27 2009 2:29 PM by CNN
    Florida's largest private insurer is pulling the plug on homeowners' policies in the state, citing the losses suffered since the brutal 2004 hurricane season.
  • 1:59 PM » Default Notices Down Sharply in California During Fourth Quarter
    Published Tue, Jan 27 2009 1:59 PM by
    Mortgage default notices fell precipitously during the fourth quarter in California thanks to new legislation that made it more difficult for lenders to initiate foreclosure proceedings, DataQuick reported today. Lenders sent borrowers 75,230 default notices between October and December, down 20.2 percent from the 94,240 sent in the third quarter and 7.7 percent less than the [...]
    Click Here to Read the Full Article

  • 1:58 PM » Foreclosure Mediation Available in all 88 Counties in Ohio
    Published Tue, Jan 27 2009 1:58 PM by
    Developed in response to Ohio’s rising mortgage crisis by the Supreme Court’s Dispute Resolution Section, the first-of-its-kind model in the nation provided local courts with step-by-step directions to launch foreclosure mediation programs. The model includes best practices, related documents, forms and other resources and is designed for courts to modify. Since not every foreclosure case can be resolved through mediation, the model assists courts in assessing information provided by both the homeowner and the lender to find a mutually acceptable agreement that is both commercially reasonable and sustainabl
    Click Here to Read the Full Article

  • 1:58 PM » Citigroup names new business heads as part of split
    Published Tue, Jan 27 2009 1:58 PM by Market Watch
    Citigroup Inc. announced executives to head various divisions as the struggling banking giant moves forward to split its operations into two segments focused on banking and other financial services. The company this month detailed a restructuring plan that will segregate peripheral or ailing businesses and assets in an isolated division, dubbed Citi Holdings. The rest of the company will consist of Citigroup's investment bank, credit-card division and regional banking operations in many parts of the world.
  • 1:58 PM » All eyes on Wells Fargo
    Published Tue, Jan 27 2009 1:58 PM by CNN
    Nearly all of the nation's largest banks have reported dreary fourth-quarter results, and now investors are wondering if Wells Fargo will do the same.
  • 12:08 PM » Cuomo subpoenas Thain over Merrill bonuses
    Published Tue, Jan 27 2009 12:08 PM by Reuters
    NEW YORK (Reuters) - New York's attorney general issued a subpoena to former Merrill Lynch Chief Executive John Thain on Tuesday in a probe into bonuses paid to the firm's employees just days before its takeover by Bank of America Corp.
  • 12:08 PM » Rosenberg on the Recession Depression
    Published Tue, Jan 27 2009 12:08 PM by
    This just in from David Rosenberg at Merrill Lynch (hat tip JN): Not your father’s recession, but maybe your grandfather’s In our marketing tour through Europe last week, we brought along our new chart package entitled “Not your father’s recession, but maybe your grandfather’s”. Looking at the youthful demographics that characterize today’s money management industry, we should have probably gone with “great-grandfather’s” instead. How is a depression defined? It shouldn’t come as any big surprise that with such a provocative title, we would be saddled with questions as to how an economic depression is even defined. Of course, most portfolio managers still don’t know that a recession is not defined as back-to-back quarters of negative real GDP prints (which we had neither in 2002 nor 2008) but instead the timing of the peaks in real sales activity, employment, industrial production and organic personal income growth. The "youthful demographics" in today's money management industry are probably a big part of the reason why they're even having this discussion. Father, grandfather, great-grandfather? It has already become quite entertaining to watch how the financial media and the mainstream media tip-toe around the "D" word. Mr. Rosenberg does not feel the need to. We are likely enduring a depression today As for depressions, there is no official definition, except to say that they have existed in the past. There were no fewer than four in the nineteenth century, one in the twentieth century, and we are very likely enduring another one today. Though this current one is muted by the fact that most countries have an elaborate social safety net (deposit insurance, unemployment benefits, welfare, and socialized health care). Depressions can last anywhere from three to seven years Depressions are basically long recessions – they can last anywhere from three to seven years, while historically cyclical recessions last 18 months – and tend to follow...
    Click Here to Read the Full Article

  • 11:53 AM » Key lawmaker calls for stronger credit swaps rules
    Published Tue, Jan 27 2009 11:53 AM by Market Watch
    WASHINGTON (MarketWatch) - A key lawmaker on Tuesday said he wants to see stronger regulation for the multi-trillion-dollar credit derivatives market, which government observers argue is a significant contributor to financial markets' failure.
  • 11:53 AM » FDIC to Tighten Interest Rate Restrictions on some Institutions
    Published Tue, Jan 27 2009 11:53 AM by Calculated Risk Blog
    From the FDIC: The Board of Directors of the Federal Deposit Insurance Corporation today proposed for comment a regulatory change in the way the FDIC administers its statutory restrictions on the deposit interest rates paid by banks that are less than Well Capitalized. Prompt Corrective Action requires the FDIC to prevent banks that are less than Well Capitalized from soliciting deposits at interest rates that significantly exceed prevailing rates. This is an attempt to address the moral hazard issue related to deposit insurance. The FDIC is of this problem: Concerns about Moral Hazard. In the insurance context, the term "moral hazard" refers to the tendency of insured parties to take on more risk than they would if they had not been indemnified against losses. The argument is that deposit insurance reassures depositors that their money is safe and removes the incentive for depositors to critically evaluate the condition of their bank. With deposit insurance, unsound banks typically have little difficulty obtaining funds, and riskier banks can obtain funds at costs that are not commensurate with their levels of risk. Unless deposit insurance is properly priced to reflect risk, banks gain if they take on more risk because they need not pay creditors a fair risk–adjusted return. A truly risk–based assessment discourages such risky behavior. The moral hazard problem is particularly acute for insured depository institutions that are at or near insolvency but are allowed to operate freely because any losses are passed on to the insurer, whereas profits accrue to the owners. Thus problem institutions have an incentive to take excessive risks with insured deposits in the hope of returning to profitability . emphasis added There are now 154 banks on the "less than Well Capitalized" list: The proposed rule applies only to the small minority of banks that are less than well capitalized. As of third quarter 2008, there were 154 banks that reported being less...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 11:21 AM » CA Housing Market -Beneath the Headlines / REO Surge to Hit
    Published Tue, Jan 27 2009 11:21 AM by
    Beneath the Headlines — the Housing Market is Languishing The chart below shows a CA housing market languishing with ‘organic’ sales (pink) at an all-time low. This, while loan defaults (yellow) – a leading indicator of foreclosures, REO and home price depreciation – are at an all-time high. PLEASE NOTE - I AM MOVING at month end …I will be delivering reports via email for a couple of weeks until the new site is up. Please ’subscribe’ for email delivery of content so I have your address. Just enter your email address in the box to the right and ’subscribe’ . Note that you will get back a confirmation email that may go to your spam filter so be sure to look for it. More Mr Mortgage Posted on January 26, 2009 5:10 PM Posted on January 16, 2009 2:23 PM Posted on January 14, 2009 1:04 PM Posted on January 12, 2009 1:52 PM Posted on January 7, 2009 11:04 AM Posted on January 3, 2009 12:03 PM Posted on December 26, 2008 4:46 PM Posted on December 23, 2008 1:57 PM Posted on December 17, 2008 1:52 PM Posted on December 14, 2008 1:49 PM Posted on December 10, 2008 6:51 AM Posted on December 3, 2008 2:13 PM
    Click Here to Read the Full Article

  • 10:54 AM » Case-Shiller: House Prices Fall Sharply in November
    Published Tue, Jan 27 2009 10:54 AM by Calculated Risk Blog
    S&P/Case-Shiller their monthly Home Price Indices for November this morning. This includes prices for 20 individual cities, and two composite indices (10 cities and 20 cities). Note: This is not the quarterly national house price index. Click on graph for larger image in new window. The first graph shows the nominal Composite 10 and Composite 20 indices (the Composite 20 was started in January 2000). The Composite 10 index is off 26.6% from the peak. The Composite 20 index is off 25.1% from the peak. Prices are still falling, and will probably continue to fall for some time. The second graph shows the Year over year change in both indices. The Composite 10 is off 19.1% over the last year. The Composite 20 is off 18.2% over the last year. These are the worst year-over-year price declines for the Composite indices since the housing bubble burst. The following graph shows the price declines from the peak for each city included in S&P/Case-Shiller . In Phoenix, house prices have declined more than 40% from the peak. At the other end of the spectrum, prices in Charlotte and Dallas are only off about 6% to 8% from the peak. Prices fell at least 1% in all Case-Shiller cities in November.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 10:53 AM » WSJ on 'The End of Wall St.'
    Published Tue, Jan 27 2009 10:53 AM by Seeking Alpha
    submits: Speaking of Wall St debacles here is a look at the first of a 3-part online video series from the WSJ titled: "the end of Wall St.", which basically discusses the time period in the fall of 2008 when the Independent Major Investment Bank (as we used to know it) ceased to exist. While I don't completely agree with all aspects of the series (namely: suggesting that Govt's push to expand home ownership was a root cause, for the simple reason that no encouragement should lead banks and consumers to lend and borrow foolishly), it's still a fairly good review of the various factors that lead to the current economic crisis. In short while I don't agree with all of it I still think it's a good discussion and identification of the crisis' various (and disparate) working part, especially since it's one of the few mainstream media pieces that has laid sufficient blame on over-spending consumers and our nation's propensity to hyper-consume.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 10:52 AM » WSJ on Fed's Commercial Paper Funding Facility
    Published Tue, Jan 27 2009 10:52 AM by Calculated Risk Blog
    From the WSJ: (hat tip Bond Girl) About $230 billion of three-month debt that the Fed owns, in the form of commercial paper, is set to mature by Friday. The questions are: Will companies like General Electric or GMAC, which issue this short-term debt to pay their bills and meet other near-term obligations, return to the open market rather than roll over their debt with the central bank, which costs a lot more? Can the still-fragile market absorb so much three-month debt in a single week without sending interest rates much higher? And is the Fed winding down this key program? ... As of this past Thursday, the Fed held $350 billion of paper in the facility. That is close to 21% of the $1.7 trillion market. This will be an interesting test to see if the Fed can shrink their balance sheet a little more.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
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